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Simulation of the Effect of Financial Regulation on the Stability of Financial Systems and Financial Institution Behavior

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Agents and Multi-Agent Systems: Technologies and Applications 2018 (KES-AMSTA-18 2018)

Part of the book series: Smart Innovation, Systems and Technologies ((SIST,volume 96))

Abstract

This study focuses on the influence of financial institutions’ behavior under financial regulation on financial systems. For this purpose, the authors propose simulation models of systemic risks expressing financial regulation and the financing and investment behavior of financial institutions. Using this model, scenario analysis is performed based on cases generated from a combination of various regulations. We then approach the issue of the trade-off between the stability of the financial system and a decline in liquidity. Our numerical experiment shows that the liquidity of marketable assets could be reduced by imposing a BS restriction.

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Notes

  1. 1.

    The complete list is given in [8,9,10].

  2. 2.

    Note that, since we look at the impact of surplus operating behavior and price fluctuations of market assets on the financial condition and cash flow of financial institutions, we do not deal with trading networks of non-marketable assets and trading networks between the central bank and commercial financial institutions.

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Author information

Authors and Affiliations

  1. Keio University, 4-1-1 Hiyoshi Kohoku-ku, Yokohama, Kanagawa, Japan

    Takamasa Kikuchi & Hiroshi Takahashi

  2. Tokyo Institute of Technology, 4259 Nagatsuta-cho, Midori-ku, Yokohama, Kanagawa, Japan

    Masaaki Kunigami & Takao Terano

  3. Yamaguchi University, 1677-1 Yoshida, Yamaguchi-shi, Yamaguchi, Japan

    Takashi Yamada

Authors
  1. Takamasa Kikuchi
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  2. Masaaki Kunigami
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  3. Takashi Yamada
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  4. Hiroshi Takahashi
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  5. Takao Terano
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Corresponding author

Correspondence to Takamasa Kikuchi .

Editor information

Editors and Affiliations

  1. University of Zagreb, Faculty of Electrical Engineering and Computing, Zagreb, Croatia

    Gordan Jezic

  2. The Heriot-Watt University, Edinburgh, United Kingdom

    Yun-Heh Jessica Chen-Burger

  3. Bournemouth University, Poole, United Kingdom

    Robert J. Howlett

  4. Centre for Artificial Intelligence, Faculty of Engineering and Information Technology, University of Technology Sydney, Sydney, New South Wales, Australia

    Lakhmi C. Jain

  5. Griffith Sciences - Centres and Institutes, Griffith University, South Brisbane, Queensland, Australia

    Ljubo Vlacic

  6. Department of Business Economics and Management and Silesian University in Opava, School of Business Administration in Karvina, Karvina, Czech Republic

    Roman Šperka

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Kikuchi, T., Kunigami, M., Yamada, T., Takahashi, H., Terano, T. (2019). Simulation of the Effect of Financial Regulation on the Stability of Financial Systems and Financial Institution Behavior. In: Jezic, G., Chen-Burger, YH., Howlett, R., Jain, L., Vlacic, L., Šperka, R. (eds) Agents and Multi-Agent Systems: Technologies and Applications 2018. KES-AMSTA-18 2018. Smart Innovation, Systems and Technologies, vol 96. Springer, Cham. https://doi.org/10.1007/978-3-319-92031-3_34

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